Johnny Depp, the actor famous for playing flamboyant pirate Captain Jack Sparrow, has apparently plundered his own real-life treasure. Depp, who has earned a reported $650 million from the Pirates of the Caribbean films and other movies, is now entangled in litigation that seems to indicate most of his fortune is gone.
Where did it go? Well, Depp is a world-class spender, for sure. Documents from the actor’s legal battle with his business manager allege Depp spends $2 million a month, including $200,000 on private jets, $300,000 for a personal staff of 40, and $30,000 on wine.
What can we learn from Depp’s financial crash, besides maybe fly commercial sometimes, and try to get by with one butler?
Have a plan. Regardless of your net worth, you need a financial roadmap to reach your money goals. This process starts with determining those objectives, followed by setting out a long-term investment strategy to achieve them. Of course, such a plan is just a piece of paper if you don’t implement it consistently over years and decades.
Stay involved with your money. A trusted financial advisor can be of great assistance in managing your money. She can give advice based on wide experience, and help you deal with the emotions generated by the unavoidable ups and downs of investing. But, no matter how much faith you have in your advisors – financial, tax, legal – you must stay actively engaged in the management of your money. Read the statements, vet the decisions, ask questions.
Uh-uh, don’t say you are too busy to mind your money. Celebs like Michael Jordan and Bruce Springsteen are famous for riding close herd on their financial advisors. If they can find that time, so can you.
Keep it simple. It will be easier to mind your money if it is invested in vehicles that you can understand and follow without an MBA in finance. Stocks and bonds fit that bill nicely. So, do that.
Remember, all glory is fleeting. There are earnings cycles in every career. Be honest with yourself about where you are, and where you are headed in terms of compensation. Is this shaping up to be a huge year commissions-wise? Congrats! But don’t go crazy. Think realistically about what next year might bring.
No hangers-on. Are you the Big Earner in your extended family or circle of old friends? That’s wonderful. If you want to the occasional nice thing for your parents, or buddies, great. But nobody gets a salary, loan or investment in their “this-is-going-to-be-huge” business idea.
Watch that debt. When you have money everyone wants to lend you money, right? Wealthy people sometimes end up with crushing debt that came easy and seemed easy to pay off. Until it wasn’t. Funny, the same thing happens to folks with more moderate incomes. Treat debt with respect. Use it only to advance your long-term money goal; for things like buying a house or starting a business.
You may never have a star on the Hollywood Walk of Fame, like Johnny Depp. But if you follow these rules, you may end up with a bigger net worth than ol’ Captain Jack.